Greed still keeping iPhone off Verizon

It’s been three years since the original iPhone debuted, but the mythical Verizon iPhone is still nowhere to be seen. Money is still the primary obstacle to this dream come true partnership, analyst Shaw Wu suggested in a Monday note to clients. He claimed the agreement between Verizon and Apple isn’t finalized because important details like “technology and economics” are still being ironed out. It’s believed Verizon turned down the original iPhone because it wouldn’t concede to Apple’s revenue sharing terms. Wu also elaborated the following:

From our checks with industry and supply chain sources and a recent SEC 10-Q filing by AT&T mentioning that exclusivity with “a number of attractive handsets” could end, we have conviction that the iPhone could likely finally be at another carrier besides AT&T here in the U.S. in 2011 and potentially at Verizon in 2011 or 2012… We believe the argument for AAPL to pursue Verizon sooner than later is to address the growing presence of Android. What better way to do that than where Android has seen the majority of its success?

He cautioned we shouldn’t rule out T-Mobile or Sprint as Apple might take its handset to multiple carriers, rather than just Verizon. If the iPhone was available on other wireless networks in the US, Wu warned, Apple’s margin would probably shrink and the iPhone’s average selling price would drop due to the lack of an estimated $50-$100 exclusivity premium.

The analyst believes the Verizon iPhone could sell between two and three million quarterly units, impacting Android more than BlackBerry.

Christian’s Opinion

Of AT&T’s 90 million subscribers, Apple has already converted most of the people who want an iPhone, so the company needs widen its scope. As for bringing the iPhone to Verizon’s 93 million subscribers, it’s a sound business move, but also an engineering nightmare because Apple would need to develop new iPhone hardware to cater for the CDMA radio technology used on the Verizon network. It might be easier to roll out the existing iPhone to other GSM operators, like T-Mobile (34 million subscribers) as a stopgap measure. From there, Apple should aim for an LTE-capable phone in 2012, when the vast majority of US carriers will have commercially deployed fourth-generation LTE networks.

The only question is, does Apple have the luxury to wait two more years given Android’s startling expansion.

Speak Your Mind

hodar

Sometimes I wonder about how the profits are used at AT&T. AT&T certainly has not done anything significant as far as coverage goes – they have pocketed the profits the iPhone has generated or their corporate bloat is so severe that despite 90 Million customers – there is not enough funds available to cover large metropolitian areas, nor urban areas better than a 4th tier supplier. There is apparently not enough funds available to contract out individual companies that own cell phones that they can lease coverage from.

Verizon, on the extreme other hand has FANTASTIC coverage in the USA. I travel quite a bit, and had 3 instances of dropped coverage. Each of these instances was a 1-5 mile stretch while driving through the Cascade, Blue and Rocky Mountains.

My AT&T coverage in a medium sized city is LESS than what I found while driving cross-country in the Great Plains (South Dakota, Nebraska, Oklahoma and Arkansas – that would be an insult if AT&T were smart enough to realize that they were insulted).

So, with the obvious differences in coverage one must ask a basic question. Obviously, Verizon has expended a large portion of their profits into improving coverage.

“Does Verizon have the profit margin to pay Apple the concessions they are asking for?”

Nitpicker

This is retarded. The iPhone is still under an exclusivity agreement. That’s the entire reason it isn’t on Verizon yet. In the 90s, they went for profit when they should have gone for market share. As a result, they have /maybe/ 10% of the desktop computer market. They aren’t going to make that mistake again.

Verizon originally turned them down both because of the revenue sharing *and* because Apple wanted to retain control over the phone. Apple wanted to be the point of contact for support, they wanted no carrier branding on the phone or packaging, and they wanted to control the features of the phone themselves rather than involving the carrier. Effectively, Apple wanted to commoditize the carrier. Verizon wasn’t having any of that, and they thought nobody else would go for it, either.

Apple has said in the past that CDMA is a dead-end technology, but that wouldn’t stop them from building a CDMA iPhone for two or three years until 4G starts to properly exist.

Zia

Iphone cannot draw the same kind of premiums it did with AT&T. Remember its apple that needs Verizon now, and not the other way round. Apple in many analysts views (including my own) is not even the best phone in the market anymore. It is still riding that cool factor which has become synonomous with most apple products.

Marcus

Nitpicker,

You are retarded. If you didn’t read the thing in quotes in the article you might want to look at it again. The SEC has been evaluating “Exclusive Phones” for a few years now because of regulations the SEC has about the consumer market. AT&T only has exclusive rights to the iPhone until the contract runs out or the SEC says. As soon as Apple agrees to terms with Verizon, the SEC will nullify/void Apple and AT&T’s exclusivity agreement.

The SEC feels that forcing a consumer to buy a service solely because they want to buy a product is not right for the consumer. Having a phone exclusive to one carrier does exactly this. The SEC will do away with this crap as soon as they want.

http://na Qi

I’ve been a very happy Verizon customer for a few years already. When I was with AT&T, their coverage was the worst experience I’ve endured with trying to make/keep phone calls.
As far as the iphone, I really don’t care for it, or the hype surrounding it. I’m a very happy Droid X owner, and it runs circles around my many friend’s iphones-AND without the anticipated froyo update. I really hope Apple does not come over to us. We don’t NEED iphone. Verizon doesn’t need Apple. Keep walking Apple.